UNIT 7

Unit Activity 1

THEORIES

1. The resident citizen and nonresident citizen is different from resident alien, nonresident alien
engaged trade in the Philippines and nonresident not engaged trade in Philippines, in terms of
their citizenship. The former individuals who are naturally born in the Philippines, the latter are
individuals who came from foreign countries and stayed here for their various reasons. Resident
aliens and resident citizen are different from each other, such that the former acquired citizenship
here even though they were not naturally born here. Resident aliens and nonresident aliens are
different from each other in terms of their duration in staying here. For taxability purpose,
resident citizens’ income is taxed whether they earned it within or outside the Philippines. The
remaining tax payers’ income is taxed only when they earned it here in the Philippines.
2. The conditions to avail the 8% tax schemes is that it is applicable to self-employed individuals
and their gross sales or receipts, plus the other operating income, must not exceed the 3,000,000
pesos VAT threshold.
3. Final withholding taxes are taxes already withheld as the individual received the income already
net of tax while creditable withholding tax are taxes also withheld but the difference with the
final withholding tax is that the individuals still needs to pay the remaining tax liability.
4. Foreign taxes paid claimed as deductions are deductions where it may set-off the foreign tax paid
to its current tax liability while the foreign taxes paid claimed as tax credit are also deductions
allowed by law to reduce tax liability.

PROBLEM

From
Compensation 1,200,000 a. 1,080,000
120,000 188,000
1,320,000 1,268,000

b
From Profession 3,500,000 . 1,080,000
(1,000,000) 2,600,000
100,000 3,680,000
2,600,000
1.
Activity Unit 2

THEORIES

1. Corporation under the corporation code are artificial beings created by the operations of law
while corporation under the tax code are still artificial being however taxing corporation is just
the same with partnership. Additionally, there are classifications for the corporation under the tax
code.
2. The treatment to tax an individual may not be the same with other individuals; a reason to support
that idea is that there are two sources which its compensation and profession. And corporation
could be treated depending of its sales or receipts.
3. Taxes are imposed on domestic corporations are basic corporate tax, gross income tax, final tax,
capital gains tax, minimum corporate income tax, profit remittance tax and improperly
accumulated earning tax.
4. MCIT or minimum corporate income tax imposed to corporations at the 4 th year or the
corporation from the date of corporation. Yes, it is taxes income.
5. A resident corporation is a corporation formed in a foreign law but operates here, and has
permanent establishment. Nonresident corporation is a corporation that does not operate here in
the Philippines.
6. A partnership is not a corporation under the tax code, looks like it is when talking about tax.
7. Improperly accumulated tax applies when a corporation attempts to evade tax by not declaring
tax.
8. The difference between the three educational institution is that a nonstick, nonprofit educational
institution is not taxed as long as the income is directly used for the institution’s operations, a
propriety educational institution is taxed 10% and a proprietary nonprofit is taxed 10% as well.
9. No, as long as the revenues earned is directly utilized for its operations.
10. MCIT may be suspended in cases where a corporation is affected by events from acts of God,
legitimate business revenue or losses due to prolong labor dispute.

PROBLEMS

1.
Gross Sales 3,000,000
30%
900,000
Income tax due and
payable 1,000,000
1,900,000
a. 0 Tax Exempt
b. 0 Tax Exempt
c. 0 No Tax Liability
d. 0 No Tax Liability
2.
3. 0, NONE

4.
Other income 10,000
1,510,000
Allowable Deductions (1,450,000)
60,000
x 2%
1,200

5. a. 1,000,000 b. 1,000,000 c. 1,000,000

25% 7.5% 4.5%
250,000 75,000 45,000

6.
a. Share in Partneship Income
4,000,000
x 30%
1,200,000
2,000,000
3,200,000

Taxable Income
3,200,000

(2,000,000)
1,200,000
x 32%
384,000
490,000
874,000 Ranger's Income Tax Due and Payable

b. PRP's Income
4,000,000
30%
1,200,000 PRP's Income Tax Due